Sales Performance Management: A Detailed Guide

Sales leaders are responsible for overseeing their sales team’s growth and ensuring performance rises to meet the company’s strategic goals.

Rather than throwing reps and money at every sales opportunity the company comes by, sales leaders can be smart about sales management by utilizing the sales performance management (SPM) framework to help optimize the company’s sales process.

This detailed guide will cover what SPM is, why it’s important, and how your company can implement an SPM strategy of its own to drive growth.

What is Sales Performance Management?

As the name suggests, sales performance is the effectiveness of the sales team or department in achieving the company’s sales goals, whether measured by metrics such as revenue, customer retention, or conversion rate.

Sales performance management (SPM) is a business’s processes, tools, and procedures for achieving those sales targets in a data-driven, structured way, with the goal of improving the sales department’s operational efficiency. A sales performance management framework manages sales teams’ performance by aligning goals, analyzing performance results, and providing continuous coaching and feedback.

Though SPM traditionally meant the framework for managing sales rep performance, it’s now come to mean the framework for managing the entire sales division, often with the help of SPM software tools.

There are several benefits of a strong SPM process:

• Quicken close times
• Remove inefficiencies
• Increase sales strategy agility
• Track employee performance
• Make data-driven decisions
• Improve employee satisfaction and retention

Three Components of Sales Performance Management

There are three broad components of the SPM framework: planning, managing, and analyzing.

1. Planning

The first step of SPM is sales planning, which covers where the organization sells and who on the sales team will manage each segment. The planning function covers account segmentation, territory management, quota setting, and capacity planning.

On top of ensuring no toes are stepped on and that reps are deployed most efficiently, advanced SPM software tools can also predict and optimize the potential of each segment, so the team can focus its efforts on cash cows.

2. Managing

Next up is managing your salespeople’s output and quota achievement. Sales managers track rep performance to ensure the team is meeting the goals set in the planning phase, manage sales enablement information and tools, incentivize and compensate reps to meet their goals, provide feedback on performance, and arrange training and development opportunities. 

With the right motivation and training, sales professionals will have everything they need to give it their all when out in the field.

Again, SPM software tools can help a sales leader track sales representative performance and automatically calculate reps’ commission and compensation rates.

3. Analyzing

Finally, SPM can key performance indicators (KPIs) and other metrics in the sales pipeline, pricing optimization, discounting, sales forecasting, and more. Using SPM to analyze this data, sales managers can see if the sales team is meeting its goals and how the company stacks up to competitors in the rest of the industry. 

This knowledge helps set the sales team’s goals for the next period and keeps them on track to staying successful and competitive in the long run.

SPM software can help you manage all of this data while using machine learning and AI tools to generate sales insights and forecasts to guide decisions. 

Conclusion

Sales performance management helps a sales department bring out the best in its reps and meet its sales goals by systematically approaching sales planning, management, and analysis. By giving due attention to all three of these components of SPM, a company can optimize its sales process and stay successful in the long run.